15 Sep Young, Brave and (Financially) Free Millennials
Let’s face it, the Millennials have the coolest name of ALL the generations. But, if you’re to believe the popular consensus, they and their slightly older cousins Gen Y are really up against it in the battle to buy that most basic of human requirements – a home. Well, you know… after food and water, and possibly very fast internet.
Just like their age, their wages can be kind of low. Often too low to buy the homes of their dreams in the most fashionable city suburbs. Having a whinge about this situation has become a national sport for some, who hope for maximum political impact by spreading the popular (but misguided) notion that negative gearing should be axed by the Federal Government, supposedly to make property prices lower for all.
That’s been a debate for decades, but the years are whizzing by and it’s now 2017. Everything is changing, just as it kind of stays the same – because the big news is that Gen Y has grown up and is now jumping into investing, not only with both feet but with gusto, and great success.
“We’re seeing many, many more Gen Y investors enter the property market, but they’re doing it in different ways,” says Propertyology’s Managing Director Simon Pressley.
“They’re open to different, more flexible approaches, and you’ve got to respect that. They’re educated, confident, determined and brave.”
“The most successful young investors we see are more ambitious about financial independence, than say, their parents were. And it’s paying off for them, partly because this generation is more receptive to investing in parts of regional Australia where property is more affordable and the potential for growth is better than what most realise,” Pressley says.
Perhaps it’s because Gen Y appears to be in the midst of its own baby boom, but many card-carrying members are realising it’s time to take the next step. Mr Pressley says despite a decade or more of predictions that they’d never be able to afford it, the generation currently aged 23 to 35 is finally investing in bricks and mortar.
“We’re finding that Millennials are less set in their ways and braver than previous generations. They’re more willing to take on a degree of risk, and they generally have a more flexible approach to life,” says Mr Pressley.
“They’ve grown up in an era of ever-changing technology. They don’t stay in the same jobs like their parents did, and they invest differently, too. Gen Y and Millennials are keen to look outside the square.”
With median house prices in most of Australia’s big cities being north of $600,000, young buyers either can’t save a big enough deposit, can’t afford the mortgage payments, or aren’t content living in parts of their home city where they can afford to buy.
Mr Pressley says ‘rent-vesting’ is just one way that savvy Millennials are having their cake, and eating it too.
“In a lot of cases, Gen Y’s aren’t ready to anchor themselves to a particular home. They want to do some adventuring and they’re open to moving for better employment opportunities, but renting doesn’t mean they’re not savvy property owners,” he says.
“We’ve helped young clients make very sound investment choices in growth areas outside of high profile cities, while still living in properties which suit their flexible lifestyle”.
Millennials are also harnessing the benefit of having extensive investor information at their fingertips from a very young age. “Buying the family home first often creates a set of beliefs about property that, while these are important to your own unique circumstances, aren’t useful for making good investment decisions,” Pressley said.
Indeed, the strategy of some Gen Ys is to use the equity they make in ‘rent-vesting’ as a deposit for their own home at a later date. Others are happy to continue renting indefinitely, while they simultaneously build an impressive property portfolio.
“We really need to start giving credit where credit’s due. Gen Y and the Millennials are quite savvy, and many of them are actually starting to invest a lot earlier than say the Baby Boomers did,” says Mr Pressley.
“Gen Y and the Millennials are increasingly realising that if they make the same financial decisions as their parents and grandparents, they’ll end up in a similar position later in life.”
“They want to enjoy all of the creature comforts of life in their 50s through to their 80s, and they understand it would be foolish to rely on aged pensions and employer-funded superannuation,” he says.
“Remember, only 18% of the 3.68 million Australians currently aged over 65 are financially independent.”
Poor old Baby Boomers. Here’s hoping there’ll be nothing poor about young Gen Y. Pressley hopes the demographic shift he’s seeing is a sign the younger generation will be able to grow and retain wealth well into their retirement.
“There’s so much information out there these days; most of it is poor quality and / or produced with vested interests. Propertyology’s core role is to collate, analyse, and interpret information to help everyday Aussies to invest wisely,” he says.
“We are a team of skilled professionals with a good reputation, which includes helping more and more young people to invest in strategically-locations all over Australia.”